Sydney holds steady as Australia’s most expensive city to build in (US$3,017 per m2), but Brisbane moves into second place due to heated market activity and rising labour costs (US$2,802 per m2).
The International Construction Market Survey (ICMS) 2024 report, from global professional services company Turner & Townsend, shows an imbalance of labour supply and demand across the region, a shortage of housing supply, and elevated construction costs are the biggest challenges facing the sector.
From a national perspective, average hourly wage growth has remained low over the last 12 months (US$64.9 in 2023 to US$65 in 2024), however, the expectation across markets is that stronger wage growth is ahead. Australia remains the third most expensive region for construction labour costs, behind North America and Europe.
The report said biggest challenge facing the sector is the imbalance of labour supply and demand across markets.
The report shows Queensland’s construction market is facing immense pressures, which are expected to intensify in the years ahead as major projects for the Brisbane 2032 Olympic and Paralympic Games get underway.
Julian Kerwood, Head of Real Estate, ANZ at Turner & Townsend said over the past 12 months, the Australian construction market has performed better-than-expected.
“Addressing the near-term challenges for the construction sector will require prompt action to increase housing supply across the regions to enable the construction workforce to migrate to where the demand is. The long-term success of the construction sector will require collaborative efforts to identify future sectors of growth and focus on targeted training programs to upskill the local workforce or attracting international skills to the region.”
“Cost escalation continues to remain high across Australian markets, driven by labour supply shortages and construction union wage increases. However, the stabilisation in building material costs has meant that average cost escalation for the region is forecast to be around 3.7 percent in 2024, which is 1.9 percent lower than last year.
“The work being done by governments to address key areas such as housing supply and clean energy production and transmission is shaping a much stronger outlook for the sector. These policies should attract support from the private sector and open the door for new opportunities for growth in the years ahead.”